Chevron (CVX) and shell Against the backdrop of the looming crisis in Iran, the two sides are closer to signing a major deal.
The two energy giants are working to seal Venezuela’s first major production deal since political unrest in January, Reuters reported. This resulted in a massive opening of the market.
The story is huge, but the timing makes it even more compelling.
The latest Reuters reports on March 11 and March 12 reveal how quickly the crisis in the Middle East is tightening markets. Iran is said to have laid mines in the Strait of Hormuz, a waterway that normally carries about 20% of the world’s oil and liquefied natural gas.
Oil prices rose as the International Energy Agency warned that the world faced its worst ever oil supply disruption due to the conflict.
While Venezuela will not immediately replace Gulf supplies, Venezuelan oil, which has been beleaguered by politics, sanctions and a lack of investment, now looks more attractive to global producers and buyers seeking supplies beyond the Hormuz choke point.
For Chevron and Shell, it’s the clearest “why now.” It will help management and shareholders understand why they need to take a greater interest in Venezuela, which has huge reserves and newly relaxed oil rules.
Shell said its agreement “formally sets out Shell’s intention to develop a variety of opportunities with Venezuela,” including offshore gas, onshore oil and gas, exploration, local content and workforce development.
Chevron starts this game with a much-needed advantage, allowing its production to rise immediately.
The company and Venezuelan energy authorities have signed an agreement as the first step in the expansion of Petropiar, Chevron’s largest Venezuelan project in the Orinoco belt, Reuters reported.
More oil and gas:
Under the terms of the contract, Chevron will drill for oil in the Ayacucho 8 area, which is located south of Petropiar and is known for its rich but largely undeveloped oil resources.
That’s important because Chevron won’t be entering new areas. According to Reuters, PDVSA completed exploration and evaluation work at Ayacucho about 20 years ago.
Chevron and PDVSA can then expand their current well clustering systems into new areas. This could allow the partners to ramp up output faster than a full greenfield project would. Petropiar produced approximately 90,000 barrels of upgraded Hamaca crude oil and 20,000 barrels of vacuum gas oil A PDVSA document revealed by Reuters last month is being revealed daily.
The market context makes this case even more compelling. On March 12, Brent crude oil prices briefly touched $100 per barrel as the conflict with Iran affected shipping and energy facilities in the Gulf region.
Meanwhile, Gulf producers are cutting output by about 10 million barrels per day. In a market like this, a company with access to more substantial reserves outside the Gulf has even more reason to act quickly. This is an inference based on reports, but it is logical.
Chevron is also seeking lower royalties and other benefits from Venezuela’s new oil law. If the terms are confirmed, the project could gain greater traction at a time when oil companies are increasingly considering future sources of oil due to geopolitical risks.
The Venezuelan government is still reviewing contracts across the oil and gas industry, adding to the company’s risks.
But it also gives large, well-known companies a chance to lock in more valuable assets if Caracas changes the rules. Reuters said a decision could be made as soon as the end of March.
The broader point for investors is that the proposal is no longer just an argument for a Venezuelan comeback. It is becoming a global supply security story. The more pressure the Iran crisis puts on the Strait of Hormuz, the more valuable oil and gas reserves become in the rest of the world, particularly in the Western Hemisphere.
-
According to Caribbean Energy Weekly, Chevron is negotiating to expand the Petropiar oil field to the Ayacucho 8 oil field.
-
Petropiar already produces approximately 90,000 barrels per day of upgraded crude oil and 20,000 barrels per day of vacuum gas oil.
-
On March 12, Brent crude prices briefly touched $100 a barrel as the Iran crisis disrupted shipping and supplies.
-
The Strait of Hormuz typically handles about 20% of global oil and LNG flows.
Chevron’s opportunity isn’t just about whether Venezuela can immediately displace the Gulf.
Instead, companies may build more long-term reserves in new markets. The focus on geographic diversification sharpens the story and enhances its usefulness to investors.
The angle of the shell is different but equally important.
Reuters said Shell has signed a preliminary agreement with Venezuela and is seeking to develop the Carito and Pirital oil fields in the northern Monagas region.
These assets stand out because they produce light and medium crude oil and natural gas, representing a more flexible mix than Venezuela’s better-known extra-heavy barrels.
Related: JPMorgan’s shocking Iran forecast could change oil’s next move
This is relevant to both export and infrastructure strategies. Light and medium crude could help blend Venezuela’s heavier oil for export, while the natural gas side gives Shell another route into a market where options are increasingly valuable.
Reuters reported that, The wider Punta de Mata regioninclude Carlito and Piritaryielding approx. 94,000 barrels of crude oil and 1.03 billion cubic feet of natural gas per day last month. Approximately 350 million cubic feet of flares are burned every day.
Burn number is very important. This shows that things are not going well, but it also shows that there is opportunity. Shell and other companies have explored ways to access Venezuelan gas, possibly through Trinidad.
In an energy market shaken by the Hormuz crisis, it has become easier to justify projects that combine oil, gas and infrastructure benefits.
It also helps explain why Shell’s negotiations with Venezuela are about more than just oil. They’re part of a larger story about what big energy companies do when one of the world’s busiest shipping lanes suddenly looks weak.
-
Shell is targeting Carlito and Pilitar in northern Monagas.
-
These fields produce light crude oil, medium crude oil and natural gas.
-
Punta de Mata’s crude oil production last month was approximately 94,000 barrels per day and natural gas production was approximately 1.03 billion cubic feet per day.
-
About 350 million cubic feet of natural gas are burned daily, highlighting room for infrastructure upgrades.
Shell’s negotiations with Venezuela are also part of a larger trend in the industry. When geopolitical shocks raise concerns about choke points, companies tend to look more closely at less developed basins that could help them secure more supply in the future.
Venezuela remains a very dangerous place to do business because of its politics and operations, but on a scale that no other country can match.
Even without a crisis in Iran, this would still be an important story in reopening Venezuela’s oil industry.
The Iran crisis makes it even more important to find out where future non-Gulf supplies may come from.
Venezuela began reviewing oil and gas projects in February and is now considering deals across the industry. Officials reportedly told company leaders they hope to complete the review by the end of March.
Meanwhile, Reuters said U.S. officials are checking the qualifications of companies to ensure they comply with sanctions before allowing partners in.
This means the real problem remains. Venezuela’s infrastructure is weak, contract risks remain high, and political uncertainty remains high.
Still, the logic behind these conversations is getting stronger. As the Gulf becomes unstable, large oil reserves in places like Venezuela become more attractive, even if they take a long time to recover.
The question is whether Chevron and Shell can maintain their positions. This could be the beginning of Venezuela’s energy renaissance, and it’s suddenly becoming more important to the rest of the world than it was just a few weeks ago.
RELATED: Greg Abel sends a powerful new signal to Berkshire investors
This article was originally published by TheStreet on March 15, 2026, and first appeared in the Investment section. Click here to add TheStreet as your preferred source.